Silver Stocks Comparative Valuations

Silver Stocks--Comparative Valuations

Weekly Report # 47

FRIDAY, August 20th, 2004

A day's wage used to be a silver dime, a silver quarter, or maybe a silver dollar. A silver dime today costs about 48 cents, at $6.74/oz. for silver. About 900 million oz. of silver are consumed annually, and just under 600 million ounces mined annually. Oddly, there is is seven times as much refined gold as silver... Buy real silver, it is scarce, real wealth, and cannot go to zero value. By the time paper money fails mankind once again, as it always does, any silver dime you can lay your hands on will probably be worth more than what $100 to $200 will buy you today. You can buy silver now, or work for it later.

This week's report lists the market capitalizations for 85 silver stocks. There are 31 silver stocks that list reserves, resources (and exploration potential) which I calculate by using my "ounce in the ground" formula. There are 54 explorers. There are about 30 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.

Please try to read the entire report before sending me an email. This report goes out now to over 11,000 investors each week.
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To read about my religious bias, see my other web site, bibleprophesy.org There are two essays near the top of the page that explain why I believe the entire world will return to using gold and silver as money again before the end times. See Ezekiel 38. Also, see my essay: Biblical Guidelines for Managing your Money

Kitco reports silver at $6.85/oz. as of Friday, 2:14 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7703. I will use .77 for ease.

How to read the table below:
Stock Symbol that works at Yahoo! Finance (Company name) / The number that follows the company name, below, represents the company's resources, divided by the market cap as denominated in silver; thus, it is the number of silver oz. "in ground" that you gain title to when you trade away one ounce of silver to buy 1 oz. of silver's worth of stock. The number is the expression of leverage that silver stocks can give you, the higher the number, the better. / Next, I list the valuation price change since last week (and stock dilution, and resource changes, if any) as up/down or even. / Finally, there are additional comments (EXPT is "exploration potential")

Company names in bold have summaries below with updated information since last week. Click on the name to see the summary below.

Please review the new format that has existed in the last few months. If I have updated any information about a company in this week, I put the name in bold. Now, you only need to click on the bold names, and it will take you directly down to the updated company profile, where the updated information will also be in bold, such as new diluted share numbers.

This first list are the companies with information about reserves/resources/exploration potential. The list is ordered/ranked based on the resource picture. The most expensive (with the fewest silver resources given their market cap) are listed first.

ABX (BARRICK) 0.93 up --producer, hedger (15? mil oz. gold hedged, 3 yrs production)
IPOAF.PK (INDUSTL PENOLES) 1.8 even --producer, mostly family owned, hedged?
CDE (COEUR D'ALENE) 2.3 up --producer (also gold) in debt, produces at a loss.
SIL (APEX SILVER) 3.3 up --zinc bonus, low grades, cash rich--$345 million! in debt
FSR.TO FSLVF.PK (FIRST SILVER) 4.1 up --producer, (not profitable '03 3rd q.) unhedged
PAAS (PAN AMERICAN SILVER) 4.9 up --producer, debt free, may hedge to develop
GRS GAM.TO (GAMMON LAKE) 4.6 up --producer, owns 26% of Mexgold
MFN MFL.TO (MINEFINDERS) 4.8 up --significant gold bonus, $35 mil cash on hand.
CFTN.PK (CLIFTON MINING) 5.7 even -- (134 EXPT) (colloidal silver product bonus)
KBR.TO KBRRF.PK (KIMBER RSCS) 5.7 up --one property, high grades, with exploration potential.
* TM.V TUMIF.OB (TUMI RSCS) 6.9 up -- (14 EXPT) recent bonanza grade silver discovery
WTZ WTC.TO (WESTERN SILVER) 6.5 up -- (23 EXPT) large mine development cost. copper & zinc bonus
SSRI SSO.V (SILVER STANDARD) 7.8 down (up in price) --large company, many properties, owns silver bullion
CZN.TO CZICF.PK (CDN ZINC) 10.3 up --large zinc bonus, high grades, low start up costs, great EXPT
SHSH.PK (SHOSHONE SILVER) 11.9 down --leased properties; need payments; in Cour d'Alene
ORM.V OREXF.PK (OREMEX RES) 10.2 up (43 EXPT)
SRLM.PK (STERLING MINING) 12.4 up --(30 EXPT) acquired the Sunshine in Cour d'Alene
FAN.TO FRLLF.PK (FARALLON RSCS) 13.9 up --(24 EXPT) low grades, silver 1/3; also gold & zinc bonus.
CHD.V CHDSF.PK (CHARIOT RSCS) 19.0 down --explorer, with inferred resources
HDA.V (HUSIF.PK) (HULDRA SILVER) 18.8 down --very tiny, zinc bonus, low start up costs.
ADB.V ADBRF.PK (ADMIRAL BAY) 23.6 down --exploring a silver property in Mex. (Huge gas bonus)
IMR.V IMXPF.OB (IMA EXPL) 17.7 up --(71 EXPT) explorer in Argentina
RDV.TO RDFVF.PK (REDCORP VEN) 20.2 up --60% gold bonus
GGC.V GGCRF.PK (GENCO RECS) 20.0 up --producer in Mex. Plans to expand and acquire
* SVL.V STVZF.PK (SILVERCREST) 22.6 down --(44+ EXPT) --(Silver in Honduras, Latin America)
ABI.V ABMBF.PK (ABCOURT MINES) 26.0 down --large zinc & small gold bonus
* MGN (MINES MGMT) 24.8 up --60% copper bonus (low grades), start up cost ~ $250 mil
EXR.V EXPTF.PK (EXPATRIATE) 28.7 up --significant zinc bonus 60% zinc, 25% silver (got out Atna)
* PLE.V (PLEXMAR RES INC) 36.7 down --just acquired 2 new projects
* ASM.V ASGMF.PK (AVINO SILVER) 39 down --will own 100% of the Avino mine +4 other silver props.
UNCN.OB (UNICO INC) 93 down --lease on largest property,$3 million due by August 31, 2005

* = I own shares

In the chart above, since last week, 19 stocks were up, 2 were even, and 10 were down, relative to the price gains in silver.

Next list: Exploration companies or producers with limited information on resources. This list is in order (roughly) by market cap, the highest market cap companies are listed first.

HL (HECLA MINING CO) --A PRODUCER (gold bonus) cash rich.
MGR.V MGRSF.PK (MEXGOLD RSCS) -- bonanza grade discovery on Jan 13th, 2004
CDU.V CUEAF.PK (CARDERO RSCS)
AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
SPM.V SMNPF.PK (SCORPIO MINING)
* FCO.TO FCACF.PK (FORMATION CAPTL) Cobolt (and Sunshine silver refinery)
* OTMN.PK (O.T. MINING) very large exploration potential
TVI.TO TVIPF.PK (TVI PACIFIC) --A PRODUCER of a dore silver bar 96% silver, 4% gold
* NPG.V NVPGF.PK (NEVADA PAC GOLD) Large "exploration potential" (owns 1 silver & 10 gold properties)
* MMGG.OB (METALLINE MINE) --zinc/silver (historic high grade silver) (low cost revolutionary oxide zinc process)
MCAJF.PK (MACMIN LTD)
* FR.V FMJRF.PK (FIRST MAJESTIC) --A PRODUCER Modernized a former producer. Acquiring properties.
BZA.V ABZGF.PK (AMER BONANZA)

This next list has silver exploration companies with market caps under about $30 million
(Market cap = total number of shares fully diluted, times the share price. It's what the company is "worth" in the market place, given the stock price, and is one of the important numbers I calculate each week in these lists.)

ECU.V ECUXF.PK (ECU SILVER MINI) --50% gold bonus
IAU.V ITDXF.PK (INTREPID MINRLS) "exploration potential"
MAI.V MNEAF.OB (MINERA ANDES) (gold bonus)
* EDR.V EDRGF.PK (ENDEAVOUR GOLD) A PRODUCER (I could not yet find a listing of resources or reserves)
CAUCF.PK (CALEDON RES)
* CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
SDR.V SDURF.PK (STROUD RSCS)
APM.V (Amerix Precious Metals Corp) (NEW BULLET GP)
QTA.V QURAF.PK (QUATERRA RES)
PXI.V PNXPF.PK (Planet Exploration Inc.)

This next list has silver exploration companies with market caps under about $15 million

NJMC.OB (NEW JERSEY MIN)
EPZ.V ESPZF.PK (ESPERANZA SILVR)
MAG.V MSLRF.PK (MAG SILVER)
EXN.V EXLLF.PK (EXCELLON RSCS)
SRY.V (STINGRAY RSCS)
* KG.V KDKGF.PK (KLONDIKE GOLD)
SML.V SMLZF.PK (STEALTH MNRLS)
DNI.V DMNKF.PK (DUMONT NICKEL) exploring Clifton's property
* KRE.V KREKF.PK (KENRICH ESKAY)
BCM.V BCEKF.PK (BEAR CRK MINING)
* CMA.V CRMXF.OB (CREAM MINERALS) Low grade, large "exploration potential"
CHMN.PK (CHESTER MINING)
MMG.V MMEEF.PK (MCMILLAN GOLD)
GPR.V GPRLF.PK (GREAT PANTHER)

This next list has silver exploration companies with market caps under about $7 million dollars:

ROK.V ROCAF.PK (ROCA MINES INC)
EGD.V EGDMF.PK (ENERGOLD MINING)
GNG.V GGTHF.PK (GOLDEN GOLIATH) --Historic silver district in Mexico
LEG.V LEGCF.PK (LATEEGRA RSCS)
TBLC.PK (TIMBERLINE RES)
TUO.V TEUTF.PK (TEUTON RES)

This next list has silver exploration companies with market caps under about $4 million dollars: (The real "penny stocks" are those with the smallest market caps, not the lowest share price!)

PDO.V (PORTAL DE ORO RS)
* AUN.V AUNFF.PK (AURCANA CORP)
ASLM.PK (AMER SILVER MINI)
PCM.V PAOCF.PK (PAC COMOX RES)
BGS.V BLDGF.PK (BALLAD GLD SLVR)
* GRG.V (GOLDEN ARROW RESC) IMR.V spin-off. $3.6 mil MC, 35 properties
MTB.V (Mountain Boy Minerals Ltd)
BBR.V BBRRF.PK (BRETT RES)
CLZ.V (Canasil Resources Inc)
LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd)
CBP.V CPBMF.PK (CONS PAC BAY MIN)

* = I own shares.

There are expanded profiles on each company, way below. But before I get to that, let me discuss my methodology, and the problems with it.

See the number above, listed after each company in the first list? That number represents the number of silver ounces in the ground that you get when you buy an ounce of silver's worth of stock. The number treats all reported ounces in the ground as equal, however, they are NOT EQUAL. Some ounces in the ground are more certain and others are more speculative. Some are higher grades, some are lower grades. Some have been well drilled, others have less drill results. They range from most certain to least certain such as: "proven & probable reserves," and then, "measured, indicated, or inferred resources."   A reserve has a feasibility study produced for it. A resource, does not.

Here's the math on how I calculate that one number. First, I get a market cap by multiplying the fully diluted shares (which bullishly assumes all options and warrants will be exercised and converted into outstanding shares) by the share price in U.S. dollars. Next, I divide that by the silver price, so the market cap is denominated in terms of silver ounces. Then, I divide the ounces in the ground by the market cap as denominated in silver. This produces the single number of how many ounces of silver in the ground you are buying when you give up one ounce of silver in your hand, for shares of stock, instead. This way, you can not only compare silver stocks to each other, you can compare them to silver directly. This also helps people in other nations, using other currencies, to value these companies.

This valuation does not include zinc, or copper, or lead, but it does include gold at a 1:10 ratio of gold:silver. At goldsheetlinks.com, they add 100% of proven & probable reserves, but only 70% of measured & indicated resources, and only 50% of inferred resources. I don't do that. I count them as all the same.

I believe that the two most important numbers that a silver mining company can report are the resources in the ground, and the number of their fully diluted shares. Of course, there is much more to a mining company than that, but without those numbers, it is extremely difficult to even start an evaluation. This report highlights those key numbers, where possible. If you think those numbers are also important, please email the executives of the mining companies you own, and ask them to make sure their numbers are clearly published at their websites.

Problems with my methodology: My methodology assumes that the more ounces in the ground, is, in theory, best, given that I expect much higher silver prices. However, unless the price of silver really moves much higher, my methodology may not be the best one. If silver does really move up very high in value as compared to today, then I expect my methodology to be one of the best predictors of rising stock values, because more ounces in the ground mean more leverage to rising silver prices. However, the companies with greater leverage to the upside usually also tend to have greater leverage to the downside, and thus, tend to be more volitile.

Other factors to consider that the single number produced by my methodology does not: A resource calculation number does not tell you the entire picture about a company. The resource calculation number is designed as a starting place for further research. Other very important considerations are as follows: How much existing mining infrastructure is in place? The more the better, so think of it as a "bonus". How much cash does the comapany have on hand, and what is their burn rate? What is the management's attitude towards money, silver, hedging, debt, and dilution? This is why I list "additional comments" in the company profiles, below.

I don't consider grade to be too important (although I list it when I can), because I consider the cost to mine to be the more important consideration. The "cost to mine" is determined in a feasibility study, which is the last thing produced before trying to raise money for final construction of a mine. And usually, they cannot even count silver as a resource unless it is at least somewhat feasable to mine at today's prices for silver. And this is why I count all the ounces as the same. If a low grade ore can be mined more cheaply, and if a higher grade ore costs more to extract, and if it has to be somewhat economically feasible even at these low silver prices to be counted, it balances out quite nicely.

To quickly "tab" down to the company you are interested in, note the symbol. Then hit "control-F" to "FIND" the symbol below.
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If I use a word you don't understand and is not listed in the dictionary at www.m-w.com you can look up the meaning at http://investorwords.com/

See my June 18, 2004 article:
I'm insanely bullish on silver.

WEEKLY COMMENTARY (All new in this section):

I have updated the information for 8 companies this week. Check the company names in bold, above.

After I did tonight's weekly calculations, I noted that most silver stocks were up about 10% this week.   That is also the approximate performance in my own personal portfolio, and also in my marketocracy.com silver stock fund, up 13.46% for the week.
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The government says that inflation is... how low is the number of this lie these days? 2%? Not counting oil, which just hit $49/barrel on Friday...

But they admit that money creation is roaring along at 8.6% for the first 6 months of 2004! Please don't just take my word for it, look it up here http://www.federalreserve.gov/releases/h6/Current/

Look here (middle number, last column)

H.6 (508)
 Table 2
 MONEY STOCK MEASURES
 Percent change at seasonally adjusted annual rates
 ------------------------------------------------------------------------------
                                                  M1          M2          M3  
 ------------------------------------------------------------------------------
  3 Months from Apr. 2004 TO July 2004           0.4          4.4          6.0
  6 Months from Jan. 2004 TO July 2004           5.9          7.0          8.6
 12 Months from July 2003 TO July 2004           4.0          3.6          4.8

I think they are creating new money at quite fast rates (8.6%) if they are paying only 1.25% on bonds, don't you?

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I have long believed that the world will return to using gold and silver as money within my lifetime. Lately, I have been thinking about how the world will return to using gold and silver coin as money. There are many, many issues involved in this topic. First, God is in control of governments of the world (Daniel 4), and second, God gives men the rulers we deserve.

Therefore, the United States cannot expect good presidents (who would return us to the gold standard) until the people of the nation return to God. If the people are evil, so will our leaders be evil, and there is no changing this. We reap what we sow. Presidents must pander to the majority to get elected. If the majority are immoral, it is mandatory that our presidents will be immoral as well.

God sets up to rule over men, the basest or lowliest of men. (Daniel 4:17)

Think about what would happen for a moment if we were blessed beyond this Godly rule, and if our prayers were answered, and if God himself were to become president. First of all, given the moral state of the people of the U.S. let's realize that God certainly would not be elected by the majority. But what would happen? And what would God do about our fradulent money situation? Well, from my reading of Romans 1 and 2, God gives men up to their lusts, meaning that he lets us choose evil if we choose it. Although God is quite permissive in this day and age, his basic laws are immutable, that men will ultimately reap what they sow, and men right now are sowing the seeds of monetary disaster. Dollars, and unjust weights and measures, are clearly an abomination to the Lord, yet God allows them today, because men choose them.

Too many men have abandoned all that is just (and who have been deceived) and are keeping the fraud of the dollar alive.

What would I do if I were president? Would I pass an executive order declaring that all dollars should be utterly worthless? I just don't see that as being productive, nor acceptable by the public, nor acceptable by God's laws, as a fair solution. A fair solution would be to let the people who wish to do so, buy gold and silver. In this way, scarce gold and silver would be allocated on a first come, first served basis, or go to the highest bidder, which is just and fair, and that's happening right now. I would certainly encourage this process along, just as I am now doing.

I'm not saying I would want to keep the fraud of the dollar alive... but what could I do? Would I issue a decree, given what I see now, that all banks that exist within the Federal banking system and are backed by FDIC... that their accounts as denominated in dollars should be backed by gold, and then make government gold available at $35,000 per ounce? But who would buy it at that price today? Such a move would also not be productive. So, what would I do? Perhaps I would simply sell government gold and silver to whomever had the wisdom to buy it, as the government is doing today? After all, it is quite clearly evident that if the government runs out of gold and silver, that government money will be totally worthless.

A study of the free market shows us that the people will use gold as money when the people demand to use gold as money. But if the people demand to be defrauded, or consent to be defrauded, how can you bring about justice?

Today, I see little political support for the sound money bill in New Hampshire, unfortunately. As little interest as there is in silver by investors, there is even less interest in this bill, unfortunately.

But how could it be any other way at the bottom of the market? Market bottoms are created when there is the least investor interest, that is also another axiom, or market rule.

The people are not going to rise up and demand to use gold and silver when the prices are at historic lows, and when the values of their fraudulent paper money are at absurd highs, like today. No, the people will want the government to maintain the high value of their paper bonds that most everybody has! Think of the relative values of the respective piles of wealth as votes.

$20,000,000,000,000 in bonds
$9,000,000,000,000 in M3
$300,000,000 worth of silver.

Which are the people voting for by what they are choosing to own? Obviously, the vast majority of people are voting for paper, and not silver.

So, how will the world return to using gold and silver as money? I'm tending to think it will only be when the majority of the people demand it, and this will only occur when the majority of the people suffer tremendously the losses that will continue to be inflicted upon them because they hold paper money.

As it stands in the past year and a half or so, silver has moved up from $4.15 to $6.85 now, which is up 65%. Thus, the people who are holding paper, earning 1%, have lost about 64% if measured by silver. Today, few use silver as a measuring yardstick to value their paper money by, but eventually, they will, and they will see the wisdom of holding silver instead of paper.

The good news is that massive and tremendous losses can now be inflicted upon the majority by a very small minority who can see enough truth to buy silver.

As I have repeatedly said each week, if only 1% of paper money holders decide to buy gold and silver within one year, that will be the end of the entire paper money system. Don't believe me, just look at the numbers!

$20 trillion in bonds
$9 trillion in M3

As I say each week: "A mere 1% is $290 Billion, which, at $500 /oz. is a massive demand of 18,039 tonnes [of gold]"

But with annual gold demand at a mere 4000 tonnnes, and with annual mine supply standing at about 2500 tonnes, there is just no way in the world that the world could sustain a 1% shift of paper money into gold without pushing the gold price to well past $1000/oz., and who knows how high!

And silver? A mere demand of $1 billion could send the price soaring to $20-30/oz.

Therefore, a righteous minority can wake up the deceived majority, and we can inflict tremendous monetary pain upon them. As Isaiah puts it:

Isa 30:17 One thousand [shall flee] at the rebuke of one;...

That's a tenth of one percent! So, if the U.S. has 300 million people, we need about 300,000 silver investors. Too bad my list is only 11,000, but I'm working on it!

The really amazing part is that the money system is growing at 8.6% per year right now! Yet, if only 1% flows to gold and silver, the system will die! Amazing but true! I feel like this is a fantastically unbelievable statistic, something right out of "Ripley's Believe it or Not!" Future generations will look back and be amazed by the stupidity of this generation.

We can affect radical societal change for the better by buying gold and silver, and we will be much better off for it, and will also be richly compensated for it as well, as the values of our precious metals rise.

So, how will the world return to using sound money? Probably not by willing choice when the price is low. Probably only by the time the price is high, and when the public demands gold and silver in preference to paper fraud.

How do you think the world will return to using gold and silver as money? Do you think we will get there? And when? Email your thoughts to me: jasonhommel@yahoo.com

Note this essay:
Can the U.S. Return to a Gold Standard?
By Alan Greenspan
http://www.gold-eagle.com/greenspan011098.html

Next week, I would like to take the time to expose some of Alan's comments. I believe his idea of a "gold standard" is perplex, and is really a paper money standard that is perceived to be as good as gold, where there are no runs on gold. His essay from 1981 should really be titled, "Can the U.S. continue to use paper money, or is paper money finished?" Or perhaps, "How the U.S. can keep the fraud of the paper money system alive as long as possible."

Here is a wonderful new essay by a new author at gold-eagle.com
The Nature of Money and our Monetary System
http://www.gold-eagle.com/editorials_04/parsons082004.html

The author mentions over and over again the death penalty in the Coin Act of 1792 that was never enforced at any time in our nation's history, and he mentions the many occasions when it should have been enforced.

Perhaps when people demand gold and silver coin as money, at that time, the U.S. will need a leader who will be willing to enforce that law?
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If I was in charge, there are many things I would change. I would not outlaw usury, for example, but I would not support it at law. In other words, I would not give usury contracts the protection of law, just as today, loan sharks cannot rely on the government to enforce performance of their loans. But if you get a home loan, and if you cannot pay, the banks can use government force to evict you from your home, and sell it on the market! Contract law does have limits; you can't sell a public bridge, you can't sell yourself into slavery, you can't engage in fraud (in theory). For my prior essays on Usury, please see Usury Enslaves - 19 January 2004 and Freedom from Usury 23 January, 2004.

One of the changes that a few gold bugs often discuss is the supposed necessity for regulation or transparency of "over the counter" derivatives. A derivative is simply a contract. Men have the power to sign private contracts with one another. It's as simple as that. We cannot force all men to reveal the contents of their private contracts. Private property demands privacy. Why do I feel I need to remind my fellow goldbugs of the 4th Amendment to the Constitution?:

Amendment IV - Search and seizure.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Now, if people are to be secure in their papers, then this means they can have private contracts, or over the counter derivatives, unregulated. The only reason for the government to step in and nose about in people's papers is if there is a probable cause to search for them. A probable cause only exists when there is evidence that a person has done wrong, as determined by a judge who will issue a warrant, or if there is someone willing to swear an oath to that effect.

What I would change is the ability of public companies to engage in private contracts. I don't think it is fair that a public company can engage in private contracts that their shareholders may not know about. A company can literally sell all the assets of the company and defraud all the shareholders, and the shareholders will not know a thing about it! This is wrong. A public company has an obligation to report their financial condition on regular annual and quarterly reports. But if a public company can engage in private contracts to deliver silver or gold at various prices, and not disclose that, then what is the point of requiring financial disclosure? Silver and gold are money, and they need to be treated as such by the law. Unfortunately, the law today has been perverted to uphold paper as money, and to hinder gold and silver's use as money.

But I feel that it is futile to demand that our current government should enforce such a change, to prevent public companies from dealing in non-transparant, over-the-counter derivatives. And why? Because this government is actively working to keep the price of gold and silver low, through leasing and derivatives! We can no more expect them to stop than we could expect them to start telling the truth. And how can we expect the financial liars in power in government to stand up and do right and make corporations (who hide their lies with more lies) start telling the truth? We can't.

Now, I mention all of this because it is a fact that any one of my silver companies that I own has the right, without telling me about it, to sell their silver, and hedge it, and lock in a price at some insanely low price ranging from $5-20/oz.! That's the way it is, and that's not going to change! If that does not scare you about investing in silver stocks for the leverage, it should! Stocks are risky! And especially so in an environment where I expect there to be wildly rising prices, and very volatile prices. I hate the fact that my companies can hedge silver, and not tell me about it. This is why I am so keen on two things. First, understanding management's views on silver, and it's why I place such a strong emphasis on it. This is also why I'm so keen to preach my view on silver... so that hopefully, no silver manager will make the horrid mistake of hedging my silver which would destroy my silver investment by giving away my silver assets at low prices.

But there is a way to protect ourselves besides demanding that the government protect us. We must know our companies well. Buyers must beware!

WE MUST KNOW OUR SILVER COMPANYS' MANAGEMENT POLICY REGARDING HEDGING.   This is perhaps even more important than the number of shares, or the ounces in the ground. So far, I have been too neglectful of this, in this report, partly because many of these companies are so far away from producing that they have not even considered this topic yet. Also, I realize that many of these companies don't want to put a stranglehold on their options for financing. They may want to be able to borrow money from the banks to finance, to be able to mine. But as I plan for my own future with regard to my silver stock investments, I have begun to think more and more about bank financing. I think bank loans are exactly the wrong strategy for financing a silver mine.

The reason is that banks have the power to create bubbles with their loans.   If banks loan money for housing, they create a housing bubble. If banks loan money to lay down internet cables, they create a bubble of excess internet infrastructure. If banks loan money for silver mining, they will create a glut of silver on the market which will be counterproductive for all silver investors. What's worse is that banks can create price bubbles at will through this process of loaning money. They can loan all kinds of money for production, and then stop loaning, and sell silver in high amounts. Then, the mines who all borrowed money to produce silver at what they thought was a good price, could watch silver plummet, and then the loans can be called in. The mine then becomes the property of the bank, and the shareholders get nothing.

If a mine cannot be financed through issuing stock to the public, then the public obviously does not need the silver.   The explorers and miners need to trust the free market process, and trust that they will get more than enough money thrown at them through equity financing if the silver price is high enough. Part of why I do what I do is to help insure that the silver miners will be able to find equity financing! And if the silver price moves back down after an equity financing, at least the silver stock remains debt free, and the stock price has no reason to drop to zero.   The free market process is the most effective way to allocate resources, and have a prosperous economy. Central banking is a bane on mankind, and banks that create money out of thin air are mortal enemies and are competitors of the mines that create real money out of the ground through the hard work of mining it.

The entire idea that banks and mines can do business together is an appalling thought. In my opinion, gold and silver miners who borrow money from banks do not understand the first thing about the product they produce, or the business that they are really in.

This is why it is so important for silver companies to own silver bullion. If the miners hold silver in preference over paper cash, they are showing investors with their actions that they "get it" and understand their product.

-------------

A liberal argument that I've heard nearly my entire life is that "the rich are getting richer," as if that's somehow bad? It's not so much an argument, as it is an appeal to covetousness, socialism, and communism. But God has said that we shall not covet the property of others. Proverbs is a book of wisdom in the Bible, and right near the beginning, it compares thieves to communists. Make no mistake, communists, socialists, and liberals (and all who suggest raising taxes) are covetous thieves. The thieves say they will share the spoils among themselves.

Proverbs 1:⁸My child, obey the teachings of your parents,
⁹and wear their teachings as you would a lovely hat or a pretty necklace.
¹⁰Don't be tempted by sinners or listen
¹¹when they say, "Come on! Let's gang up and kill somebody, just for the fun of it!
¹²They're well and healthy now, but we'll finish them off once and for all.
¹³We'll take their valuables and fill our homes with stolen goods.
¹⁴If you join our gang, you'll get your share."
¹⁵Don't follow anyone like that or do what they do.
¹⁶They are in a big hurry to commit some crime, perhaps even murder.
¹⁷They are like a bird that sees the bait, but ignores the trap. ¹⁸They gang up to murder someone, but they are the victims.
¹⁹The wealth you get from crime robs you of your life.

The Bible version is the Contemporary English Version. (People have suggested I don't quote from the KJV, as it's too hard for people who are unfamiliar with archaic English.)

The contemporary gang is now the entire two-party political system, the Democratic party, and also the Republican party that has done nearly nothing to reduce taxes now that they finally came to power in the house, senate, and Presidency.

The contemporary means of theft is the entire paper money banking system, taxes, and inflation.

The contemporary trap that lies in wait for the thieves is the destruction of all paper money. They will only end up shortening their own lives, as their false and fraudulently stolen wealth will vanish, and then what will they do to survive if they are not killed by the impoverished mob?

The essential implication of their argument that "the rich are growing richer", is that this is somehow bad for society, and that such wealth growth must be stopped through taxes on the rich, who must not be paying "their fair share". I hate that argument, too, because the wealthy do pay more. They even pay the income taxes of the workers who work for them! Where do you think their worker's income comes from? It comes from the profits made by their employers! And if such income taxes on US workers are too burdensome, they will take their business offshore, or sell their business to invest in silver instead.

Taxes do not help society grow. They help the governmental parasites grow, and that's it. Actually if government workers were merely parasites, it would not be so bad, but they are worse than parasites, they actually restrict economic business with their rules. It would often be better if we paid the government regulators to sit at home and do nothing and stay out of our productive lives!

But let's get back to "the rich are getting richer". First of all, I would argue that if wealthy people are growing richer, such is a sign of societal growth, which is a good thing! If the rich grow richer, it proves that economic opportunities for all people exist, which should be the reason that government exists. But if the rich are growing poorer, then you must be living in someplace like Cuba or worse, and you better get yourself on a boat, plane or train, and get yourself to another nation, and fast!

It would not hurt me, not one bit, if one man held half or even 3/4 the gold in all the world, live on property the size of Australia, and could hire 100,000 servants to cater to his every desire. And why not? Because his gold hoard would just make the rest of the gold all the more scarce and more valuable!

But what does it mean that the rich are getting richer anyway? As measured in dollars that are inflating, the rich must increase the number of dollars they own, just to stay even! So, of course the rich must be getting richer, as measured in dollars!

But to what do you compare the rich? The poor? The Bible says the poor will always be with us. And the reason is very clear to me. Many people are lazy, gluttonous, stupid, drug-using, alcoholic, idol worshippers. They will probably never grow rich until they first cleanse themselves of their sins. Imagine how productive a person could be if they always worked, never rested, ate little, never did any drugs or drank, and never wasted any time on any idle and worthless pursuits.   Many people are amazed by my productivity, but I drink a bit from time to time, and am sometimes lazy, sometimes I play games, and take time off. I imagine how much more productive I could be. And if I'm a shining example, then no wonder many people are poor.

You also cannot compare the rich to the poor because what is poor? Zero dollars? Well, of course then anyone with money will always have more than the poor! The poor have nothing by definition!

Or, the poor have less than nothing, as the poor are often in debt, or increasing their debt! So if the poor have less than nothing, well then of course the rich are going to be richer than the poor!

In truth, ever since 1980, the wealthy, as measured by the value of their gold and silver holdings, have been growing steadily poorer! Shocker! Yes, it's true! The socialist argument is not only incorrect in it's assumptions about whether it is a good thing or a bad thing if the wealthy grow wealthy, but it is also a lie for the past 24 years! The wealthy have, in fact and truth, only grown more poor! If you held true wealth, gold or silver, from 1980 to today, you saw your wealth decrease, as gold's value was attacked by the paper money pushers!

The only escape from this awful conclusion of communism is to rush to gold and silver for wealth protection, preservation, and growth.

----------

Readers tell me about silver stocks. For this, I'm very thankful. And it takes me a lot of research to pour through them. But of all the tips I get, very few get my attention. Finally after many months, I think I got another really great one, almost unbelievable it is so good. This particular silver stock, I believe, based on historical estimates, (not 43-101 compliant) may have about twice as much silver reserves and resources in the ground per ounce of silver's worth of stock than Avino--which profiles the best on this free silver stock report, except for Unico.   This month, the subscribers to my personal portfolio got a look at the name of this company before all of you, who receive this free report. And yet, my subscribers paid little attention, mostly due to the reduced market interest in silver stocks. But why did they get this tip? Because I bought some prior to August 1, and it was in my portfolio, and that's the deal. But I just could not yet put it on this list, because I'm still not done buying it. If you signup to the look at my portfolio, you can get the name of this stock, and a brief profile of it.   It is highly unusual that the look at my portfolio contains anything close to a stock tip, or trading advice, but this time, this might qualify.

Pay attention to the companies that advertise. Some of my best investments were in companies that advertised.   I saw a banner ad for Sterling Mining at silver-investor.com, David Morgan's web site, about a year ago. I followed the ad, looked over the company, and saw little information that I could see to make a buying decision, back when the stock was 25 cents/share. Finally, at 50 cents/share, I bought some Sterling Mining stock, simply because I liked the company's philosophy, to acquire silver properties, and the stock eventually reached a high of about $13.00/share a few months ago. All that, from paying attention to an ad!

From my many discussions with mining company executives, I know that they often will begin an advertising program when they become aware that their stock is under-priced by the market. Those companies who are advertising tend to feel that their stock is cheap. This is a very good clue for investors, because it means that management will be less likely to want to do a large share offering (diluting the value of your investment) until higher prices are reached.

One of the best clues to know when to buy a stock is if you see insider buying. I love seeing insider buying. Insiders may sell a stock for any one of numerous personal reasons, such as personal portfolio diversification, or to raise money to live on. But insiders buy stock for only one reason: they think it's cheap.

It is exceptionally extraordinary if you can find an example where you are buying a stock below a price that insiders were recently paying for it, or if you can buy a stock below a recent financing. I have always made money on this strategy, so far.   For example, I acquired Canadian Zinc at .11 Cdn, below .15 Cdn, the price of a prior insider financing, over a year ago. I acquired Formation Capital at lows, ranging from 21 cents to 25 cents, below other recent financings, and today stands at about 43 cents Cdn. I acquired Metalline at $1 in a financing below the price of insider buying at $1.30, and Metalline recently traded as high as $3.00.

The stock that was highlighted in the Aug. 1 "look at my portfolio" is also priced at 2/3rds of the price of a recent financing. Now, I have recently shared many of such examples, where a stock is trading below a recent financing, with my readers in recent reports. But this stock has significant historic silver reserves and resources also, at the best price I've seen.

I just don't understand who is selling or why. I think it's an institution who just wants out of this illiquid market sector, and that's fine by me.

Oh, yes, this company is also advertising elsewhere. What do you know! But the company is not yet on my free report, and when it is added, I suspect the company may rise 50% to 100% in a week! I've seen such price action before, when a company was added to this free report, and buried way down, and not even featured. For example, when I first added O.T. Mining. See here:

http://news.goldseek.com/GoldIsMoney/1071411060.php   --week 13, OTMN.PK was $1.75/share
http://news.goldseek.com/GoldIsMoney/1072036522.php --week 14, OTMN.PK was $3.00/share

Today, OTMN is around $4.50-$5.00/share!

Now, it's not guaranteed that the stock will go up when I add it to this list. I thought Plexmar would go up when I added it to this list, but it didn't really move much, and then the bottom fell out of the silver stock market right around that time.

So... why should I hype a stock tip like this? I don't need the $34 per signup, on the perhaps 5-15 signups I anticipate I may get by hyping like this. So, why? Most of the money, anyway, will go straight to my many advertising partners, affiliates, or my marketing team. See, advertising costs money, and I want to expand my market reach. But I'm tired of blowing my money on marketing, if people have no interest. So, this is a way for me to both measure market interest, and it's a way to self-fund advertising growth. It's like a church. It grows if people donate.

Also, people should not be buying silver stocks unless they can afford something like a $34 hit for a tip. Most commissions are larger than that.

If you really want to donate to my work, and if you have not done so already, simply buy a "look at my portfolio" in the size package you like. Simple as that.

The other reason to hype the look at my portfolio for this one stock is that I feel I already let the cat out of the bag a little bit, since it already went out to existing subscribers, and yet, the stock didn't really move, neither in price, nor volume. Therefore, I think I can continue to buy some myself, even if a few people signup and get the tip.   So, I hope it's not too counterproductive by making this offer. See, my problem is that I actually stand to lose money by letting out a stock tip before I'm done buying!

Finally, I suppose there is a benefit if people signup, and start to bid up the stock a bit. It would be confirmation that they like what I like, and there is a bit of safety in that. In fact, some market experts say not to increase your holdings unless the stock price begins to go up. But they are trend investors, and I'm not. I'm a value investor, and I'd rather finish buying at current prices, and not have to buy any at a higher price. I also don't care if it dips up to 25% temporarily if I'm done buying, because I'm that confident already.   Therefore, I don't need any confirmation from others.

But studying market sentiment is worth it. For if 30 people sign up next week to the $34 look at my portfolio, yes, my webmaster team will make about $1000. But if that happens, I'll be more inclined to spend $2000 (280 silver rounds) to hire a publicity agent. It's not an uneconomic business plan, since I make more on the capital appreciation of my portfolio, and on the finder's fees. But I shouldn't spend the money if people are not willing to listen. Instead, I should keep the 280 silver rounds.
------------------

Every now and then, people ask me about an old silver stock or gold stock they once owned. Usually, I know nothing about them. But I just found out a service that may be helpful.
Old Company Stock Research Service
http://www.oldcompany.com/

They will offer to buy old certificates that are worthless, considering them like used stamps--merely collectibles. I would be cautious about this, and get a second or third opinion about a stock before parting with your certificates.

----------------
About bullion dealers. Way back in 1998, I thought I would become a bullion dealer. I still have not yet done any profitable bullion dealing. For me, the risk of default seems too high. I only like a "cash on the barrel" method.

What I have learned, though, is that few bullion dealers seem to make any serious money from bullion dealing. Surprising, but true. It seems they do something slightly different to make money.

Anglo Far East Bullion company, for example, mints their own silver shekel coin. But the minting cost of these coins is staggering! They cost $25/oz., if you do the math. The cost of their gold shekel coins contains a much smaller premium by comparison, at only about $500/oz. The silver shekel coins make them less of a bullion coin, and more of a collectible, or novelty item.
http://www.anglofareast.com/

Northwest Territorial Mint, for example, also mints coins. They are the largest private mint in the U.S. They mint for the Pentagon, and they mint the popular one-ounce silver rounds. But they also make many different kinds of commemorative medallions, which is their larger business. If you want a small run of, say, 100 silver rounds to commemorate a wedding, or something like that, a custom designed polished silver coin will run between $13 to $45 each, depending on how much you want to spend on engraving services. They basically are in the business of putting "art on coins". They are also a large bullion dealer, with the best prices anywhere on one-ounce rounds, at 45 cents over the spot price if you buy in bulk.
http://www.nwtmintbullion.com/

Tulving is the dealer that I regularly use these days, because his buy and sell spreads are so narrow, and I know I get a good price when I sell silver for my living expenses. Yet, in Tulving's bio page, http://www.tulving.com/htinfo.html he says his main focus and recommendation are numismatic coins: In his opinion, the place to be? PCGS MS69 and Proof 69 Deep Cameo certified Gold, Silver and Platinum American Eagles, PCGS Modern U.S. Comemmoratives, and PCGS Proof and Mint State State Quarters.
http://www.tulving.com/

And have I found success bullion dealing? Not yet. I surprised myself by earning finder's fees from private placements, which are orders of magnitude more than I make from the web site purchases of the "look at my portfolio".

----------------

Because I have a market reach, I also receive a lot of tips about silver stocks. And thus, I believe I may have invested in some of the best ones that came my way. If you believe I may have an edge based on my work and unique position... then the best way for me to share this with you is to is tell you more precisely where I put my money. It's not investment advice. I offer a monthly "look at my portfolio". I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly. It includes which stocks are 9% and more of my portfolio, those between 9% and 6%, under 6%, under 3%, and under 1%.

To order: http://www.goldismoney.com/articles.php

If you have any questions about billing or order fulfillment, you need to contact my support staff at support@goldismoney.com and not me. I manage a large portfolio, and I don't have time to process billing requests. I don't bill any cards, my support staff handles all of that. The toll free telephone customer support line is: 877-895-6824.

-------------------
The Anglo Far East Bullion company has offered me a service. They will be hosting a conference call titled, "SILVER'S EXPLOSIVE FUTURE" with Jason Hommel. (August 27th at 6.00 PM west coast Pacific time) --available to the first 200 people who register at
http://www.anglofareast.com/teleconference.html
(so far 50 people have already registered, over 2 weeks in advance)

The Anglo Far East Bullion company is also working on a web-broadcaster for the call so that it can be available live on-line and are hoping that this maybe will be available in time for this month's call.

Please take a moment to register now, before next week.

----------------
This week, I was interviewed for about 15 minutes for
http://www.resourceworldradio.com/

It was not a live show, but pre-recorded. I believe I'll be in show #25

-------------------

I will be speaking in Idaho at the Silver Summit in September 23-24
http://www.silverminers.org/summit/index.html

I will be speaking in Toronto at the Cambridge Gold Show on October 3-4.
http://www.goldshow.ca/

-------------------
General Commentary on Silver (slightly modified from last week):

Now, I think it's time that the silver community started a letter writing campaign to the editors of newspapers around the world, to tell them about silver.

Here is a sample letter:

May 21, 2004

Dear Editor,

I'm a silver investor. I believe paper money is fraudulent. There is over 30 trillion dollars, U.S., worth of bonds in the world, but less than 2 trillion dollars worth of gold, according to gold.org.

As of April, 2004, the size of M3, the money in U.S. banks, has reached 9.1 trillion dollars, yet due to fractional reserve banking, the total of U.S. currency and coin in circulation is only 724 billion dollars as reported by treas.gov.

At silverinstitute.org and cpmgroup.com, they each report that silver has been in a deficit for about 15 years, where world mine supply has been about 500 million ounces, scrap supply about 200 million ounces, and industrial and jewelry demand about 800 million ounces. The difference, about 100 million ounces, has come from investor and government selling, drawing down reserves of silver. Known supplies of refined silver are down to about 250 to 600 million ounces. At the COMEX, they are down to 48 million ounces of silver left that is registered for delivery, which you can see at nymex.com.

The governments of the world are printing up too much paper money, and the world is running out of real money, silver. I believe this will lead to the price of silver rising dramatically in value, around the world.

I urge your readers to verify the statistics I have provided, and to make their own decisions.

Sincerely,

Jason Hommel

------------------
I wrote an article:
Miners to Use Silver as Cash - 27 November 2003
Apparantly, I was about 6 months too early in my predictions, but that's ok, I'm a very long term thinker and investor. I did not miss the mark by too much time, and if you think in terms of decades, I was right on the mark.

There are several companies that are increasingly deciding to hold their cash in the form of silver bullion. These companies are:

SSRI SSO.V (SILVER STANDARD RSC)
SRLM.PK (STERLING MINING)
NPG.V NVPGF.PK (NEVADA PACIFIC GOLD)
EDR.V EDRGF.PK (ENDEAVOUR GOLD)

------------------
The Silver Valley in Idaho is bringing back the use of silver as money. A silver one-ounce coin, a "Sterling" to be used as a $10 piece.
http://shoshonenewspress.com/index.asp?Sec=News&str=2869
------------------

For news on the New Hampshire Sound Money Bill, that proposes to use U.S. Treasury minted Silver Eagles and Gold Eagles as money see: http://www.goldmoneybill.org/

25 Reasons why the Sound Money Bill Must Be Supported
by Jason Hommel

Send any donations you can, to:
[These are not political campaign donations.]

SOUND MONEY FOR AMERICA,
c/o Henry W. McElroy,
15 Iroquois Rd, Nashua, NH 03063
ANY AMOUNT, ANY LEGAL TENDER CURRENCY - U.S. OR FOREIGN !

For more info, contact
Rep. Henry W. McElroy, NH State Representative
Sponsor of the bill
603-233-5892

Harvey Wharfield
978-635-9586

We also need assistance with the following.

1. Please contact your local representative to your state government. Find out whether they might support a similar "sound money bill" in your own state.

To contact your state rep to the federal goverment, see http://www.house.gov/writerep/
To contact your state rep to your local state government, you will have to find that on your own. Try searching for "contact state representative california" and replace the name of your state in the search.

2. If you know of any local representaives to your state government, who may be GOOD, LIKE MINDED REPRESENTATIVES, SENATORS, and GOVERNORS, who may like to support, or sponsor, a sound money bill in your state, please tell them about the NH initative. Copy the above, and send it along to them. And call Henry W. McElroy or Harvey Wharfield, and let them know of the other reps who may assist the cause.

3. If you have an email list to people who may be interested in gold and silver as money, or who may be good conservatives, please send out this notice to the list, so the project can move forward!

--------------------------
There are two excellent annual silver surveys that are sponsored by industry.

The survey by silverinstitute.org costs $195, 87 pages.
http://www.silverinstitute.org/wssum03.pdf -- 8 page free summary of last year's reeport.

The survey by cpmgroup.com costs $150, 162 pages.
http://www.cpmgroup.com/SSpress2004.pdf --3 page press release.

The two reports present the case that about 500 million oz. of silver are mined each year, about 200 million oz. of silver comes from scrap, and about 100 million oz. of silver comes from investor dis-hoarding, either by individuals or government sources, in order to meet the annual demand of about 800 million oz. of silver by industry & jewelry. This is wildly bullish, because investors are net selling more than buying, and I think the potential of investor demand is huge, and can be measured by seeing how much paper money there is in the world.
--------------------------

Here are two U.S. Government produced reports on silver, containing data on years from 1900 to present, on U.S. & world production, and U.S. consumption, and U.S. industry & government stockpiles.

Report #1
http://www.goldismoney.com/ssr/USsilver.xls
Report #2
http://www.goldismoney.com/ssr/USsilver2.xls

I evaluated these government produced reports in my silver stock report #36.

In sum, we are running out of silver. The U.S. government had over 3 billion ounces of silver in 1940, and today, has very little left, or none.

--------------------------

The Commodities Futures Trading Commission

The CFTC report on the allegations of manipulation in the silver market -- 9 page report
The CFTC report confirmes much of the research above, and almost outlines the bullish case for silver!
--My comments on the CFTC report are in silver stock report #34 & #35

--------------------------
Silver consumption, per capita, in the U.S. is the same today, in 2004, as it was in 1945.

And what is the per capita consumption of silver in the U.S. today? 5500 tonnes x 32152 = 177 million ounces of silver used per 285 million people. 177 / 285 = .62 oz. silver consumed per year, per person, in the U.S., whether in 1945, or in 2004. Each person in the U.S. today, on average, uses 6 tenths of an ounce of silver.
--------------------------

See my article: Biblical Guidelines for Managing your Money

As the New York Times, January 11, 1859, page 2 said---
"It is well known that the most colossal fortunes the world ever saw have been based on silver mines..."
--quote found by Charles Savoie

----------------------------

WHERE and HOW to BUY SILVER BULLION
http://www.goldismoney.com/buy-gold.php

----------------------------
My 2004-2009 price predictions for gold and silver:
2004: $595/oz. gold, 50:1 ratio = $12/oz. silver
2005: $1011/oz. gold, 30:1 ratio = $34/oz. silver
2006: $1719/oz. gold, 10:1 ratio = $172/oz. silver
2007: $2923/oz. gold, 5:1 ratio = $ 585/oz. silver
2008: $4,969/oz. gold, 1:1 ratio = $4969/oz. silver
2009: $8448/oz. gold, 5:1 ratio = $1698/oz. silver
2010+: infinity dollars/oz. gold, infinity dollars/oz. silver.

I calculate the gold price rise by guessing that by 2009, M3 will have a "gold-value" like it did in 1980, which is to say, M3 was worth 2 Billion oz. of gold or less. It also assumes M3 will about triple in that time. These figures are conservative, because I see no reason that M3 should be valued more than the gold the U.S. actually holds, which is a mere 261 million oz., not billion. Today, the M3 value is $8870 billion / $425/oz. = 19 billion oz. of gold M3 could buy in theory. The silver:gold ratio is also a very, very vague guess, reflective of monetary demand chasing silver, which is more scarce than gold in above ground, refined form. I have no idea when the ratio of 15:1 will be exceeded, I'm just totally guessing. I suppose it could happen this year or next month for all I know. Of course my real price targets are infinity dollars per oz. for both gold and silver when all is said and done, I just don't know how long that will take, nor what year it will be. But my point in producing the price predictions is to show my bullishness for silver and gold.

----------------------------
A great overview on silver: Douglas Kanarowski's 78 Approaching Forces For Higher Silver Prices

See also Douglas Kanarowski's article: What Impact Will Digital Photography Have on Silver?

Doug's third article is also excellent: Silver -- the next big thing in the global markets? Answering A Few Silver Questions

----------------------------

See the 600 year silver chart to see how undervalued silver really is:
http://goldinfo.net/silver600.html

----------------------------
Look at the summary of the world silver survey by GFMS Limited on behalf of The Silver Institute :
http://www.gfms.co.uk/Publications%20Samples/WSS03-summary.pdf

Note, there is virtually no monetary nor investment demand. Note, the 2002 mine production (585 mil oz.) is greatly exceeded by industrial, photo, and jewelry demand. (838 mil oz.). Note the chart on page five, "Supply from above-ground stocks".

The difference between mine supply and industrial demand was met by a combination of three factors: 1. Government selling, 2. Private selling, 3. Recycling

U.S. government selling is ending, as their stocks have run out, or will run out. This factor will reverse, because the U.S. government will need silver to continue their coin program, and/or need silver when they wake up and decide they need to replenish their strategic stockpile for domestic security. Silver is a war material. China's selling of silver will also likely turn into buying, as China will need silver for continued industrial development, or when they also lose faith in the U.S. dollar.

Private selling has been rapidly shrinking and is now almost ended, and should turn into buying, and become monetary demand. Monetary demand is everything in the silver supply / demand situation. It's not now. Now, it's nothing. But it will become something incredible, because the dollar is dying.

----------------------------
The following is a "must read": Ted Butler's best ever explanation of how silver is manipulated lower than it should be.
http://www.investmentrarities.com/11-04-03.html

Over 3400 people have signed the silver petition to stop the manipulation at the COMEX:
http://www.PetitionOnline.com/comex/

Ted correctly points out that a lower price creates excessive demand from consumers. However, Ted Butler does not point out, and neglects to mention, that a perpetually low price also creates lack of demand from investors who are "trend investors".

I think most silver experts over-analyze all the supply and demand factors of the silver market. No factor is more important than monetary demand. The force of photographic demand is like a light breeze compared to the hurricane or tornado of monetary demand. Monetary demand is everything.
----------------------------

Consider the gold market for a moment: Even short selling at the COMEX is nothing compared to monetary demand. The short position most certainly helps to depress the price of gold as the short position is growing larger. However, it adds fuel to the fire if there is short covering, and thus, it can boost the gold price later. But the commercial short position on the COMEX is next to nothing compared to the non-reported "over the counter" trading that is done that does not appear on the COMEX.

(Numbers in metric tonnes, 32,152 oz. per tonne.)

870 tonnes -- the paper position at the COMEX, 280,000 contracts for 100 oz. each.
5,000 tonnes -- the official number admitted that the central banks have sold.
15,000 tonnes -- the number GATA research shows that central banks have sold / or leased.
30,000 tonnes -- the number of official central bank gold, minus either the 5000 or 15,000 tonnes.
145,000 tonnes -- all the gold mined in the history of the world.
2,600 tonnes -- annual mine supply
4,000 tonnes -- annual demand

And all of that is nothing compared to the amount of dollars out there that exist that could buy gold. $20 trillion bonds, $9 trillion M3 = $29 Trillion. A mere 1% is $290 Billion, which, at $500 /oz. is a massive demand of 18,039 tonnes. Do you understand what that means? That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not that much gold available.

Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.

----------------------------
To scare away investors--that is the entire reason gold and silver are manipulated in the first place. Only the trend investors can be deceived. The problem is that nearly everyone is a trend investor. Very few investors understand value. If people knew the facts and used their brains, the available above-ground refined silver would be gone by tomorrow, and the price would be well over $20-50/oz. But don't trust me, check the numbers and follow the links:

"The money chart"

   1,000,000,000,000: 1 Trillion dollars
     1,000,000,000: 1 Billion dollars
                1,000,000: 1 Million dollars
$45,153,000,000,000: U.S. Household wealth, as of first quarter, 2004. (Includes Real Estate, and investments)
$33,000,000,000,000: World bond market, yr end, '01: http://tinyurl.com/vr7u

$26,400,000,000,000: World stock market, June 2002: http://www.nyse.com/press/1044027443845.html
$20,200,000,000,000: U.S. bond market, yr end, '02: http://tinyurl.com/vr7g
$11,447,800,000,000: U.S. GDP, 2004 q1 http://www.bea.doc.gov/bea/dn/home/gdp.htm
$11,300,000,000,000: NYSE U.S. stock market, April, '04 (363 bill/s x $31.14/s ave.) http://nyse.com (See: Market info: quick facts)
$9,274,000,000,000: M3 (money in U.S. banks) July, '04 http://tinyurl.com/vra0
$7,337,786,947,237: US debt, Aug. 20-04 http://www.publicdebt.treas.gov/opd/opdpenny.htm
$2,360,000,000,000: U.S. annual budget 2005 http://tinyurl.com/3xbd2
$1,860,000,000,000: World "official" gold mined in all of history, 145,000 T @ $400/oz. http://tinyurl.com/vrcc
     $300,000,000,000: Estimated silver mined in all of history: 30-40 million oz? @ $10/oz.
     $724,174,342,365: Total U.S. paper currency & coin in circulation, Dec. 31, '03 http://www.fms.treas.gov/bulletin/index.html
     $700,000,000,000: U.S. annual budget deficit (current).
   $272,000,000,000: Market Cap of Microsoft (03-2004) http://tinyurl.com/vrcn
     $222,000,000,000: M3 increase (money in U.S. banks) from Jan 2004 to April 2004 (in three months).
   $180,000,000,000: Debt of Ford Motor Co. (03-2004) http://tinyurl.com/vrd1
   $104,400,000,000: US gold, 261 mil oz., @ $400/oz. http://tinyurl.com/vsr9
   $100,000,000,000: all the world's gold stocks/equities (estimated?)
       $75,000,000,000: Money flowed into Equity funds in the first quarter, 2004
       $8,226,000,000: all the world's "primary" silver stocks (80 of them on this list, as of June 25, 2004)
         $6,710,000,000: 671 mil oz. of "identifiable" silver bullion left in the entire world, according to GFMS @ $10/oz.
          $524,000,000: 52.4 mil oz. of "registered" COMEX silver bullion @ $10/oz. http://tinyurl.com/vrcw

So, what do all those stastistics mean?

For a while I was using M3 and dividing that by the US gold (261 million ounces), which implies the us dollar is 84 times more valuable than it should be, and that gold should hit $34,000/oz. after the fraud is destroyed. Today, I realize I need to add in the Bond market, because bonds are an asset class designed to siphon away and replace real money, which is to say, gold. This gives a price of about $111,111/oz. for gold. At $ 430/oz, this implies that US bonds and paper currency are 258 times more overvalued than gold.

Gold is overvalued relative to silver, because at current prices, it takes 68 ounces of silver to buy 1 ounce of gold. Historically, this ratio was 15 or 16. Given the silver shortage, this ratio will hit 10:1 or 5:1, or even 1:1. Thus, gold is perhaps 68 times more overvalued than silver.

Silver is overvalued relative to certain select silver stocks, perhaps by a factor of 3 or 10 or 20 to one.

Thus, if you multiply all those numbers, 258 x 68 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 139,000 to one. In other words, if silver stocks reach their true value, and paper currency disappears as it always does, then you might expect certain silver stocks to go up in relative value by a factor of 139,000 times more than they are worth today. By that time, you should definitely sell the silver stocks, and buy gold.

Can silver stocks really appreciate so much? Is there historical evidence for such a crazy thing? Yes.

See http://www.sterlingmining.com/old.html
Excerpt:
"CDE rose from penny stock status (.02 in 1967) to an NYSE-listed, $60 per share stock in 1980. In fact, the average share on the Spokane Stock Exchange rose in value nearly 16000% (yes, sixteen THOUSAND percent), as America could not get enough of silver and silver stocks."

CDE rose by a factor of 3000, or 300,000%, and by 1980, the metals boom was stopped short, and paper money's death was postponed. If paper money dies a death that lasts a generation world-wide, then even greater gains should have been expected.

For this reason, a wise silver stock investor should NEVER sell silver stocks for paper cash. A wise silver stock investor who looks for value would never sell a fairly valued silver stock for an overvalued silver stock that traded for hundreds of thousands of times more value than it should be. Likewise, there is no excuse for a silver stock investor to have any cash or money market or bonds in his portfolio for any reasonable length of time, except for when selling one silver stock to raise the cash for another silver stock, or for when you need to raise the cash to buy silver, or a private placement in another silver stock.

So, if you want some fairly liquid alternatives to cash, in case you don't know what other silver stocks to buy at the time, here they are:
1. Buy silver. You can hold silver in an IRA.
2. Buy CEF. Central Fund of Canada, ticker symbol CEF. It's gold/silver bullion fund. It has 50 oz. of silver for every 1 oz. of gold. The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute. Unfortunately, given the current ratio, about 55% or more of the value is in gold.
3. Buy a fairly large cap silver stock, with fairly large volume, that is stilll fairly cheap on the list. SSRI is probably the best candidate.

----------------------------

The sheer stupidity of big money not recognizing the value of the world's remaining silver is utterly shocking to the rational mind. Clearly, bond holders are utterly deceived, and totally unaware of the situation. All my readers should understand and know that bonds were originally invented to suck the capital and money (gold and silver) away from the people. Bonds today are a paper promise to repay paper. What a con game! Are bond holders conservative and safe? No, they are fools! There is nothing safe about holding a paper promise to receive more paper when we have been experiencing hyperinflation for the past two and a half years!

See my prior essay, " Inflation & Deflation During Hyperinflation "

----------------------------
And the fund investors who buy paper silver futures contracts instead of real silver are a very odd bunch of fools, for they should realize that nobody can deliver 800+ million ounces of silver promised in the paper contracts and options that does not exist. It's like the paper longs are betting on the bank run happening, but they all are making sure they get at the end of the long line. Instead, they could go front and center, where there is an open window available where you can go and get physical silver, and nobody is there. Idiots! If you know a bank run is going to happen, and you are actually willing to bet on it, then go and withdraw your money before it is too late! Don't bet on it happening, which, if it does happen, your contracts will be defaulted on! Amazingly blind idiots. Wake up!

See also my prior essay, "The Moral Failures of the Paper Longs"

----------------------------

How bullish am I on silver? Here's an interesting way to put it: "68 times infinity" dollars per ounce.

I believe the dollar will eventually be destroyed, likely within my lifetime, hence the "infinity" part. I believe the ratio of silver to gold may be equal during a spike, when the market realizes that above-ground refined silver is more rare than gold. Thus, silver may outperform gold by a factor of 68 times better. Currently, the ratio is 68 ounces of silver can buy one ounce of gold or 68:1.

I may end up selling silver for gold, some at the 10:1 silver to gold ratio, some more at 5:1, and I would sell any silver remaining at a 1:1 ratio, that we may hit during a supply/demand crunch during a paper money collapse.

How we can tell if silver is leading gold, or if gold is leading silver? IE, which is going up more, faster than the other? The way you can tell is by looking at the ratio. If the silver:gold ratio is going up (say, from 60:1 to 80:1), then gold is moving up faster (because it takes 5 more silver oz. to buy an oz. of gold. If the ratio is going down (from 60:1 to 40:1), then silver is moving up faster. So, keep an eye on the ratio.

----------------------------
For a list of bullion dealers:
http://www.goldismoney.com/buy-gold.php

For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html

To track the 163 ticker symbols of the 100+ stocks on this list at yahoo: (Updated on April 2)
http://www.bibleprophesy.org/SilverStockExtra.html

To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf

A good website that hosts posting boards for many of the smaller canadian stocks (that Yahoo! finance does not have boards for) is stockhouse.com
Click on "Bullboards".
----------------------------

This is a list of primary silver stocks.

I count a company's ounces of gold as 10 oz of silver. Why? Because I have a very strong positive bias in favor of silver over gold.

Given my bias in favor of much, much higher silver prices, then, to me, the grades of silver are far less important than buying more oz. in the ground. More oz. in the ground at a lower cost is the most important consideration for me.

My method is simple. Cost per ounce in the ground. How much do you get (silver reserve totals), and how much does it cost (market cap)? The cost is the market cap divided by the silver reserve totals. Cheaper is better. Buy low, sell high.

Disclaimers, Warnings, and Advice: I have gathered the information below over the course of several months. I believe it is accurate to the best of my ability. I have made mistakes in the data from time to time. I'm human. I have collected the information from public sources such as company web sites and public information found at yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time. The number of outstanding shares can change as a company engages in new share issues to raise more capital through private placements, or if outstanding warrants (and options) are exercised and converted into shares, or if shares are bought back. Shares can be consolidated, or split. The number of ounces of silver in the ground can also change, as these are often only estimates. The number can also change up or down, depending on drilling results.

This report is not investment advice. This report contains information that may or may not be up to date, and may be inaccurate. I urge you to contact the company and do your own research to verify the information contained in this report.

This report is not an offer to buy or sell any securities. I am not a broker. Only your broker can buy or sell securities for you.

I urge you to consult with your investment advisor to determine whether these kinds of investments are right for you.

I also caution you to be aware of your investment advisor's advice, they are sometimes paid to push things like mutual funds, bonds and other securities that may not be in your best interest to buy. Some investment houses are short physical metal, and thus, they may attempt to strongly discourage you from buying precious metal or precious metals investments. I believe that the propaganda machine in support of frauds such as bonds and the dollar is so strong, that they may even believe what they say when they give bad advice to avoid the safety and protection of precious metals. It is most likely that they simply do not understand the precious metals market as well as you do.

All total estimates of "ounces in the ground" can vary widely. There are "proven and probable reserves" which are the highest category of certainty which is obtained through many drill holes, and then at the least accurate, there are "inferred resources" which are hardest to estimate. Additionally, every miner always has "more silver properties that need to be explored, which probably contain more silver". For the purposes of this report, I have added all those numbers together. It is believed that all these "ounce in the ground" estimates can be profitably mined at $5-6 per ounce silver, or lower. Thus, I believe that when silver trades for $15/oz. or above, that all of these ounces can be mined at a substantial profit.

I may be wrong. (I probably make mistakes in every article, and there have been updates and corrections made each week, especially as prices change.)

Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can't franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.

Do your own research. Be responsible for your own investment decisions. Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person.

Contact the company. Check the company web site, read the annual reports, check my numbers, check my math, and email the company. That's what they are there for, to answer your questions, and to speak about the opportunity of the company. Don't trust everything you read over the internet. I am a biased source. I own silver mining stocks. And I'm not a broker, nor an investment advisor. I'm just a private investor trying to make sense of this crazy world, and sharing my information and thoughts on silver companies.

Beware of scammers. Surely, there are scammers in the mining industry in the past, and there will be scammers in the future. Remember the fraud of Bre-X. The new 43-101 compliance laws put in place after Bre-X will not prevent a "certified" geologist from lying if he feels lying will create a better payoff. The Bible warns, "trust no man", yet at the same time advises us to "cast our bread upon the waters", and to not issue "false allegations" against others. Physical gold and silver provide the "payment in full" as long as the coins or bars themselves are genuine and not fake.

This report may be copied, and transmitted by other people, and may become outdated by the time it reaches you.

I can't tell you how you should invest your money, of course. The reason is that I don't know how convinced you are of the silver bull market, nor do I know how soon you will be needing the money back, so I don't know how long you can wait to see results, nor do I know how much liquidity you need. Nor do I know the size of the money you have to invest. It is very hard to invest large quantities of money in a small market cap stock.

That being said, my investment strategy seems to be working for me, so far. And so, here is how I have started an initial valuation process of the following silver companies to guide my own investment decisions.

----------------------------
(Market cap is always converted to US dollars and denominated in US dollars because I divide by ounces of silver, which are also denominated in dollars)

The Market Cap is the usual tool to value a company. It is what the company "costs to buy" if you could buy the entire company, all the shares, at the latest share price. It is calculated by multiplying the share price, by the total number of shares that the company has issued. In reality, you could almost never buy an entire company at the price of the Market Cap, but only a small portion. Usually, even small buying pressure, such as trying to buy 1% of a company, can push up the price of a stock by up to 10-50% higher. In my reports, I list Market Cap in terms of millions of dollars as "$75 mil MC".

To calculate the Market Cap, I try to get and use the number of "fully diluted shares". A company creates shares when they sell them to investors in what are called "private placements", or "initial public offerings" (IPO). These usually consist of shares and warrants, sold for cash that the company will need to grow and expand.

The "outstanding shares" is the number of shares that exist out there if you count them all, and it does not count the warrants, which are like options. The investor can "exercise the warrants" which is a right, but not an obligation, to buy more shares from the company at the set price of the warrant.

If the company does well, and the stock price moves up, all the warrants will be, or should be, exercised and converted into shares, especially if they become "in the money", and the warrants are significantly cheaper than the stock price.

Now, "fully diluted shares" is the total number of shares, plus the warrants, counting warrants as if they were all exercised and became fully trading shares. I think "fully diluted shares" is a better number to use to calculate market cap than by using "outstanding shares" as most do.

Finally, I go beyond valuing a company based on Market Cap alone; instead, I value a company by dividing the Market Cap by the assets of the company, which are usually the silver reserves in the ground. Thus, I can get a sense of what you are getting for what you are paying. And then, I denominate the whole thing in terms of silver, and not dollars, to get a more constant measure.

----------------------------
(These first four companies, BHP, GMBXF.PK, KGHM and BVN produce a lot of silver, but look to be way too expensive to buy for the silver exposure for your portfolio.)

BHP Billiton Ltd (BHP)
http://www.bhpbilliton.com/
web.queries@computershare.co.uk IR
--'produces 40 mil oz. silver annually from one mine'
Additional comments: unfortunately, BHP has a 57 Billion market cap, so we can't buy BHP for the silver exposure. IE, $53 Billion / oh, say, 1000 million?????= $53/oz.

Dear BHP: By all means, keep mining the silver if you want the silver exposure, and want to be in the silver business. But don't sell the silver. Keep it. Let the profits of your entire company accrue as an increasing physical supply of physical silver. In fact, do as Buffett did, and buy more silver if you can. It would be infinitely easier for you to buy silver from yourself than it would be to buy 40 million ounces of silver from the COMEX, which, today, might be impossible.

KGHM Polska Miedz
http://www.kghm.pl/en/index.php
ir@kghm.pl
--KGHM is the world`s sixth-largest coppper producer and second or third in silver.
1163 tonnes of silver produced in 2001.
1163 x 32152oz.tonne = 37.4 million ounces of silver produced in 2001
--Copper/Silver mine in Poland.
--Market capitalisation is about $$1.52 billion.

Grupo Mexico SA de CV (GMBXF.PK)
http://www.gmexico.com/
http://www.gmexico.com/Html/contactUs.htm
651,646,640 shares (2002 annual report)
@ $4.00/share
$2606 mil MC
"Grupo Mexico ranks as the world's third largest copper producer (copper at $1.24), fourth largest producer of silver and fifth largest producer of zinc."
They produced 28.2 million oz. of silver, worth $129 million, in 2002. (P. 5, annual report.)
Total value of produced metals: $2527 milllion. (but the company lost money in 2002). They mainly produce copper, 900,000 tons worth $1.5 billion in 2002. Thus, silver, at 2002 prices, is only 5% of their production value. Silver is a by-product for them, not a main product.
I don't have silver reserve figures, nor do I see any need to find them or add them, since they are not a primary silver producer, and I don't think anybody would be buying them for the "silver exposure".
If we assume 280 mil oz. of silver (ten years reserve for production), then we stilll don't have anything exciting for the silver alone.
$2085 mil MC / 280 = $7.45/oz. cost.

Compania de Minas Buenaventura SA (BVN)
http://www.buenaventura.com/
dhuguet@buenaventura.com.pe (IR)
NYSE:BVN
- Peru´s largest publicly traded pprecious metals company
--produces over 10 mil oz of silver per year
--looks way too expensive for the silver alone: 2.7 Billion market cap.
-------------- -------------- --------------

ABX (Barrick)
http://www.barrick.com/
investor@barrick.com (IR)
535 million shares outstanding (1 Q 2004)
@ $20.30/share
$10,860 million Market Cap
5.5 million oz. / year gold production.
--production hedged out for 3 years, or about 15 million oz. (most notorious hedger of the industry, the "leader")
--price of hedges locked in near the market lows, perhaps $340/oz. on average, nobody knows for sure, because Barrick will not say
--reportedly, Barrick is trying to "unhedge".
--reportedly, they plan to deliver 1/3 of production to hedges, which means they will be hedge free in about 10 years.
--the size of the hedge, 1 Q, 2004: 14.7 mil oz. gold, at $400/oz., would be valued at $5.9 billion dollars.
--but they claim to be "debt free", if you ignore the gold they owe for delivery, at locked in, low prices. (only true if gold is not money)
--cash: $850 million
Silver Reserves reported to be 850 million ounces!
Gold Reserves reported to be 86 million oz. (x 10 = 860 mil oz. + 850 silver = 1710 mil oz. "silver equiv."
$10,860 million Market Cap / 1710 mil oz. = $6.35/oz. silver
You may get "approx" .93 ounces in the ground for 1 oz. silver's worth of stock, if the silver isn't hedged.

Additional comments: Barrick earns $26 million in first quarter. x4 = $104 million, which gives a P/E ratio of 103. Ouch, that's high. The hedge book loss was $10 million.

Over the years, Barrick has hedged their production, which many claim has helped to depress the price of gold and silver, by artificially adding to supply. (Barrick's promises becoming the extra supply.) The declining price of the precious metals has put other miners out of business, which Barrick has acquired at low prices. If Barrick goes bankrupt due to their hedges, and rising gold and silver prices, then perhaps Barrick's many properties will, once again, be sold at distressed prices.

About a year ago, perhaps spring 2003, ABX made an announcement about covering 30 million ounces of silver they sold short. Then, a large buyer showed up in the futures contracts for about that amount.

1 Q 2004 note on hedging silver, p. 33: "At March 31, 2004, we had fixed-price commitments to deliver 22.3 million ounces of silver over periods primarily of up to 10 years. We also had written silver call options on a notional 7 million ounces of silver with an average exercise price of $5.76 per ounce. These options expire at various dates in 2004 and 2005. The options are classified as non-hedge derivatives for accounting purposes.

Looks like they never closed out the silver hedge, like they said, but that they just bought options or futures that expired, or maybe were rolled over. I don't know whether they stilll have paper contracts that offset their hedges. In fact, perhaps the dip in the silver price can be explained by the options that Barrick wrote on some silver?

I expect silver bullion to continue to outperform ABX stock at these prices. I don't really count Barrick as a silver company... Let me be abundantly clear. I primarily list Barrick to show how poorly it compares to all the rest, and to help show how much better the rest compare. This is a "comparative valuations" report, after all.

IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2003 annual, unchanged since 2001)
@ $3.90/share
$1550 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1550 mil MC / 419 oz. silver = $3.70/oz.
You get "approx" 1.85 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: Industrias Penoles is the world's top producer of refined silver. They actually derrive more revenue from silver than any other source. But they lost money in 2002. Produced 21.5 mil oz. silver 1 Q 2004 (Net earnings of $342.5 million 1 Q 2004)

The word late Feb. 2004 from ECU Mini, who reported to lemetropolecafe.com, is that Penoles hedged silver at low prices. As reported at lemetropolecafe.com, "We know the market is so tight even the world’s largest silver producer, Mexico’s Penolas, wasn’t thrilled about supplying 1 million ounces for a special project with ECU Silver, led by their extremely able CEO Michel Roy."

From 2003 annual statement, by Dec 31, 2003, Penoles hedged 1.5 million ounces of silver at $5.31/oz. That looks to be a bad bet, but easily coverable for Penoles. They bought an option to sell (put) 17 million ounces of silver at 4.94. Another bad bet. Totally wasted money, it appears to me. They also have an option to buy 8.5 million ounces (call) at $5.53. Not bad. Such hedging practices, win or lose, make it more difficult for investors to know and guess the current operational state of the company. Who knows whether Penoles will lock in more silver, and take away the upside potential profitability for shareholders, or even waste money on put options that will never be exercised.

Whether Penoles hedged an entire 2 years worth of production by Feb, 2004, I don't know, and remains to be seen. Penoles also engages in hedging dollars in the foreign exchane markets, further complicating matters.

77 million oz. silver refined by the metals division in 2003, and 1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They produce about 48 mil oz. of silver from their mines 2003, and they have expansion plans.

I've heard this stock is tightly held, most is family owned.

Their oz. numbers are "proven & probable reserves", which is much more certain than most of the others which are mostly "inferred and indicated resources." They undoubtedly have "inferred and indicated resources" in addition to the "proven & probable reserves," I just could not find any info on that at the website or in the annual report. There is no need for a Mexican company to comply with Canadian law, 43-101. When CDE recently complied with 43-101, they raised their total numbers by about 30-50%?

Given the report in March, 2004, that Penoles has hedged silver for two years, I expect silver bullion to continue to outperform IPOAF.PK stock at these prices.

CDE (COEUR D'ALENE)
http://www.coeur.com
coeurir@coeur.com (208) 769-8155 or (800) 624-2824
214 mil shares outstanding (June 2004) not fully diluted
@ $3.90/share
$835 mil MC
"Current cash, cash equivalents and short-term investments stand at approximately $252.7 million at January 31, 2004, giving effect to recent $180 million offering of 1.25% Senior Convertible Notes due 2024, net of offering costs."
July 15th, 2004: Cour Presents Resources in Cdn 43-101 form:
http://biz.yahoo.com/cnw/040715/id_coeur_d_alene_mine_1.html
Total of proven & probable reserves: 175 mil oz. silver, 1.4 mil oz. gold. Total silver equiv: 189 mil oz.
Total of measured, indicated, and inferred resources: 76 mil oz. silver, 1.4 mil oz. gold. Total silver equiv: 90 mil oz.
(This increases the number from 189 mil to 279 mil oz. silver). Before, Cour was not reporting any resources, only reserves.)
(Produced 14.2 mil oz. silver in latest fiscal year (early 2004)
$835 mil MC / 279 mil oz = $2.99/oz.
You get "approx" 2.29 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: CDE's page on silver, "The Value of Silver" says nothing about silver as money. Unbelievable!

Wheaton recommends rejecting the CDE buy out offer:
Wheaton Does not Intend to Pursue the Coeur D'alene Mines Proposal: Recommends Shareholders Vote IAMGold Combination
Monday May 31
http://biz.yahoo.com/bw/040531/315071_1.html
Interestingly, as one reason, Wheaton says: CDE has a history of losses and negative operating cash flow.

Quarterly Loss Reduced From $31.2 Million a Year Ago to Just $3.0 Million in 2004's First Quarter
As of May 5th, CDE announced: No silver or gold hedge positions in place.

For the full year 2003, the Company reported a net loss of $67.0 million, or $0.40 per share, compared to a net loss of $81.2 million, or $1.04 per share in 2002.

Why does CDE continue to mine and sell silver at a loss? Why has CDE borrowed $180 million to continue expanding this business plan? Why couldn't CDE have raised the money from issuing more shares? Why has CDE stock increased over seven times from about 30 million shares outstanding at the end of 1999 to 214 million shares outstanding by the first quarter 2004? How was CDE able to secure such favorable terms for a loan? "giving effect to recent $180 million offering of 1.25% Senior Convertible Notes due 2024, net of offering costs."" Who did CDE borrow money from? Who stants to gain if CDE continues to produce silver at a loss?

If CDE produced silver at a loss during the first quarter 2004, how much money will they make if silver hits $10/oz? Perhaps the break-even price for production is a constant $8.00/oz.? Regardless of their "cash cost" numbers. If so, and if CDE produces 15 million oz. of silver per year, then at $10/oz., CDE may make up to $30 million dollars, at the most, from their silver production, if none of their other costs like energy costs rise in price due to inflation. Mining uses a lot of energy, just so that you know, so I don't think it is likely that CDE will have profits even with higher silver prices in the $8-10 range due to inflation. Given that CDE has a market cap of up to $1000 million dollars, CDE just is not worth it at all, in my opinion. And neither would CDE stock be worth the price if they had a market cap of $300 million, in my opinion. I would rather own silver, as it moved in price from $6 t